Category: Latest Updates

Dutch flat products processing company 247 Tailor Steel began the construction of a new production site in Hilden near Düsseldorf in December, Kallanish notes.

On a working area of 10,000 square metres, the new site will initially be equipped with four laser-cutters and with four edging machines.  Construction is projected to be completed in summer this year, and the location will be laid out to enable installation of further machinery.

Hilden will be 247 Tailor Steel’s third production site, in addition to its headquarters in Varsseveld and the German site in Oyten near Bremen, which was enlarged in 2018 (see Kallanish passim).

The company meanwhile has also carried out an expansion project at its Varsseveld headquarters. Its founder Carel van Sorgen sold 60% of the company to financial investor firm Parcom in 2019.

The Turkish Trade Ministry will probably decide on trade measures against the EU based on the principle of reciprocity, following the European Commission’s expected review of steel quotas, a Turkish producer executive told Platts Monday.

Another executive of a major Turkish producer, however, said that as no notable developments happened regarding reciprocal duties for a long time, despite some statements in this regard, it is hard to make a comment currently.

Turkish mills were holding negotiations with the Turkish Trade Ministry over potential action against the EU, based on the principle of reciprocity, as reported.

Turkish Trade Minister Ruhsar Pekcan, who held negotiations with EC Trade Commissioner Phil Hogan in Brussels said in the last days of 2019 that the EC may bring forward the review date of the quotas on Turkish steel to as close as the first quarter of 2020.

“This review could be as soon as January 15,” a producer executive told Platts Monday, adding however that he is not very optimistic about a positive development regarding the steel quotas amid some EU producers’ contrary efforts.

European steel association Eurofer called on the EC in mid-December to “have another go at reviewing the steel safeguard” in light of continuing high import levels into Europe and sustained global steel production overcapacity.

According to the latest data from Eurofer, Turkish imports declined by 22% month on month in October, amid quotas, but the country remained the top supplier of origin for European steel imports, with a 16% market share.

The Turkish Economy Ministry, which launched a steel safeguard investigation into steel imports a year ago, ended the investigation at the beginning of May 2019 without taking any action.

— Cenk Can

The European steel plate market was expecting a challenging year as capacity cuts will not be enough to tackle excess volumes, sources said in the wake of Germany’s Dillinger starting short-time working.

The introduction of reduced working hours at plate mill Dillinger at the beginning of the year will help the pricing situation in the market but will not be a long-term solution to general overcapacity, according to the sources.

“We hope that short-time working will have a positive impact. But for commodity material, it is necessary that volumes are being taken out of the market,” a German mill source said.

Dillinger said it had reduced working hours from January 1 following “a strong decline in demand” in the second half of 2019.

The northern European plate price dropped by around Eur70/mt last year, according to the Platts TSI North European plate assessment, seeing the biggest drops in the latter half of the year.

“The heavy plate market continues to be seriously affected by global overcapacity and continued high imports from third countries into the EU,” Dillinger said in a statement.

A Dillinger spokesperson told S&P Global Platts it was not be possible to say now how long the measure would be in place, adding it would not disclose any output numbers.

However, sources said that once the mill was back trading more actively, it would be expected to offer on the lower price side.

“Dillinger will be searching aggressively for volumes on the market again after [short-time working],” the mill source said.

Semis producer Hüttenwerke Krupp Mannesmann — jointly owned by Salzgitter, Thyssenkrupp and Vallourec and which produces slabs for plate production — has also been under special measures and in a hiring and spending freeze.

Plate mill Ilsenburger Grobblech — owned by Salzgitter — also had a brief cut in working hours late last year, according to sources.

“The biggest problem in Europe is overcapacity. We have 16 million mt supply, but only 11 million mt demand. Cost pressure is high,” said another source at a European mill.

“2020 is going to be more difficult,” the source said, adding that the future of other plants such as Thyssenkrupp’s plate mill would be questioned following the cancellation of Tata and Thyssenkrupp’s European steel merger last year.

— Laura Varriale

The under-pressure UK steelmaking sector, never far away from a challenge, had a particularly testing few days last week. Three of the country’s four major steelmakers were all hit by adverse news related to either confirmed or implied reductions in jobs, Kallanish notes.

The week began with the publication of an interview with Tata Sons chairman Natarajan Chandrasekaran by the Sunday Times.  With reference to The UK’S largest steelmaking site at Port Talbot, the chairman was quoted as saying, “I need to get to a situation where at least the plant is self-sustaining. Whether it is in the Netherlands or here, we can’t have a situation where India keeps funding the losses just to keep it going.”

This was followed on Thursday by the news from Liberty Steel that 355 jobs are to be cut at its special steel mill at Stocksbridge in Yorkshire and at its re-rolling plant in Newport. The company cited “… challenging market conditions,” as the reason for the move.

Finally, on Friday, a steel trade unions’ negotiating committee revealed that China’s Jingye Steel was implying that jobs would need to be cut at British Steel should it successfully acquire the long products specialist (see related article).

Both the trade unions and steel sector umbrella association UK Steel continue to point the finger of blame at a lack of action on the part of the UK government to support the industry. The old chestnuts of high electricity costs, high business rates and the newer tariff-free access to overseas markets caused by the UK’s decision to Brexit are all highlighted by both parties.

The new Johnson-led UK government has its own broader issues to deal with. It is unlikely however, in the light of the history of inaction by the previous three conservative governments, that any short-term relief for the indigenous steelmaking sector will be forthcoming anytime soon.

Southern German steel distribution group Gebr. Lotter KG has made another acquisition by taking Krönlein, a distributor of rebar and building materials headquartered in Schweinfurt.

Lotter bought the shares of Krönlein from the former owners in autumn last year. The managing partner of Krönlein, Ulrich Herrmann, will continue to manage the business together with Sven Bobe, who joined the company in 2019. The previous owner families will also remain closely linked to the company as silent partners, Lotter tells Kallanish.

In the field of reinforcing steel, the network of bending shops within the Lotter group creates the possibility of supplying construction sites throughout southern and central Germany, the company says. In particular, a coherent sales and delivery area is being created from Lake Constance via Frankfurt to Berlin, it notes. Through the partnership, the Krönlein operation is gaining access to extensive storage and processing capacities, Lotter adds.

The Lotter group has 1,600 employees at over 40 locations in Germany and in the last financial year generated sales of more than €500 million ($556m). Its main areas of activity are rebar and other steels, products for building services, flooring, steel doors and gates and liquefied gas.

German sections maker Hoesch Schwerter Profile, owned by Italy’s Calvi group, filed for insolvency in December. The company, based in Schwerte, Westphalia, specialises in sections for fork lift trucks.

Following a shutdown period over Christmas, the company has this week returned to normal production and business for the time being, “…so that supply to customers is guaranteed,” a spokesperson tells Kallanish. Still, the phase of preliminary insolvency will conclude at the end of February, “…and then we will see what will be next, if we will continue or not,” the spokesperson says.

The company most recently achieved a revenue of €100 million ($111m) at production of 70,000 tonnes. The mill’s capacity is approximately twice that, and peak production reached ten years ago was 100,000t.

Last year, the mill was hit severely by the slowdown of the economy and steel demand. “The economic downturn was a bad blow; one year ago, it all looked quite different still,” the spokesperson says.

Liberty Steel is cutting 355 jobs across its speciality division in South Yorkshire and hot-rolling mill in Newport, Wales.

The company cited “challenging market conditions and a lingering reduction in demand for UK steel products”, and said the cuts are designed to ensure the “long-term viability and competitiveness at these locations”.

“Unfortunately, the steel industry in the UK is facing challenging conditions and we have made the difficult decision that there is a need to reduce the workforce at a handful of locations, in order to make them sustainable for the long term,” Liberty Steel UK chief executive Cornelius Louwrens said.

Liberty’s Newport hot-rolled coil (HRC) line has been operating substantially below its 1mn t/yr production capacity — in the year to March 2019, LSN operated at around 25-30pc of capacity, according to Argus calculations. Argus‘ weekly domestic UK HRC assessment fell from £492.50/t ddp West Midlands on 14 February last year to a series low of £375/t ddp at the end of November.

In its latest financial report, LSN said it transferred shares worth around £3.8mn (€4.5mn) to Liberty Commodities in the financial year to March 2019, to settle debt owed to the trading company.

Argus reported in November that Liberty was looking to cut costs and headcount at its speciality business, which last year had some scrap suppliers stop selling to it for credit reasons.

The job cuts will be centred at Stocksbridge, Rotherham and Brinsworth, all in South Yorkshire, and Newport.

Trade union Community has urged the UK government to discuss high energy costs and business rates, which put mills in the region at a disadvantage relative to their counterparts in continental Europe.

UK unions labor unions Tuesday requested an urgent meeting of the national Steel Committee to raise their concerns about Tata Steel UK, after that the chairman of the Tata group said the company “can’t have a situation where India keeps funding the losses just to keep it going.”

Natarajan Chandrasekaran, chairman of the Tata Sons group, which owns Tata Steel, said in an interview with the Sunday Times that the company’s steel plant in Port Talbot, South Wales, needed to be “self-sustaining.” The plant can produce 3.5 million mt a year of crude steel.

“It is extremely disappointing Tata has sought to influence discussions by making threats in the media,” the unions — GMB, Unite and Community — said in a joint press release.

The unions said there were challenges at Tata Steel UK, but that this was mainly caused “by years of underinvestment in the assets.”

“…we have made it clear to Tata Steel, at the highest levels, that the way forward for Tata Steel UK must include new commitments on job security and commitments on strategic capex to safeguard the future of UK steelmaking.

In November, Tata in a bid to staunch losses and improve the financial performance and transform its European arm announced it would have to cut 1,600 jobs in the Netherlands, 1,000 in the UK and 350 elsewhere in the world. Through its proposed transformation program, Tata Steel was initially targeting a positive cash flow by the end of its financial year ending March 2021. Tata Steel’s UK losses deepened to GBP371 million ($486 million) last year from GBP222 million, the Sunday Times reported.

A spokesperson for Tata Steel’s European operations said that what the chairman said in the interview had already been communicated to colleagues through the company’s transformation program.

— Annalisa Villa

An Italian appeals court Tuesday decided that blast furnace No. 2 at the ArcelorMittal Italia plant, formerly the Ilva steelworks, in Taranto can stay open and continue to produce steel, Italian steel federation Federaccia and the plant’s labor unions said.

ArcelorMittal declined to comment.

The Taranto Appeals Court accepted the appeal by Ilva’s extraordinary commissioners against the shutdown of the blast furnace at the largest steel plant in Italy. On December 10, a lower court decided that the furnace should be shut down, rejecting s request for extension “of the use of the facility for a year.”

The blast furnace has a design capacity of 2 million crude steel a year but is now operating at a rate of 1.5 million mt/year, the unions said.

The decision was crucial for the continuation of the negotiations on the future of the steel mill between the government and commissioners with the current owner, ArcelorMittal Italia.

ArcelorMittal had previously asked for an extension to the deadline to keep the blast furnace operating. The failure to grant an extension along with the removal of the penalty shield prompted ArcelorMittal Italia to pull out from buying Ilva on November 4. In response the special commissioners filed an urgent appeal in the Milan court with the Italian government which started to negotiate with ArcelorMittal.

On December 20, ArcelorMittal signed a non-binding agreement with the Italian government to continue negotiations on a new industrial plan for Ilva, including discussions on a substantial equity investment by a government-controlled entity. The talks are continuing and a solution is expected to be reached by the end of January.

Ideally, the Italian government would want the plant to produce 8 million mt/year with no job cuts. This contrasted with the steel giant’s plan to cut production to 4.5 million mt from next year and eventually produce 6 million mt by 2023, with 6,000 job cuts. This plan was rejected by Italian Prime Minister Giuseppe Conte in December.

“We are completely satisfied with the decision on blast furnace 2. Thanks to this decision, negotiations can continue on the reorganization and relaunching of the most important steel site in Italy,” Federacciai President Alessandro Banzato said.

— Annalisa Villa

ArcelorMittal confirms to Kallanish that the start-up of the first new coke battery in Gijón is planned for 12 January. The activity will follow the restart of its blast furnace number 2 on the previous day (see related article), the steelmaker says.

The second battery in Gijón is planned to begin production by the end of April 2020. The facility should be operating at full capacity in June.

The consumption of external coke would be reduced when battery no.1 reaches the expected production level. The steelmaker currently imports coke as a temporary solution mainly from ArcelorMittal Poland’s Zaklady Koksownicze Zdzieszowice (ZKZ) plant, ArcelorMittal adds.